What To Do With An Old 401(k) Balance
A lot of people leave the money they've accumulated in a retirement account with an old employer when they resign and go to a new company. With the job market such as it is now, it's not unusual for somebody to have two, three or even more retirement accounts spread across that same number of former employers either.
When I get asked about what to do with these funds, the question is usually regarding how and where to move it so the money is being managed the most efficiently. Taking action can be confusing, and often the rules and tax consequences of the options available seem pretty daunting too.
While there really isn't one answer that suits every person's situation, it's rare that this has to be a very complicated process. You just need to know the right questions to ask yourself. I thought this was a nice, easy read from Kiplinger's that gives a summary of what a typical person's options are. The bottom line? Most people like to consolidate everything into as few accounts as possible because it's simpler to track over time. That, coupled with the ability to control exactly what you're invested in, means that an IRA is usually a great place to start. A reputable financial planner can always help sort out the options available to your specific situation.
